International Marketing

Introduction International marketing is defined as the performance of business activities designed to plan, price, promote, and direct the flow of a company´s goods and services to consumer or users in more than one nation for a profit.

Definition The activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large in more than one country.

International marketing consists of the activity, institutions, and processes across national borders that create, communicate, deliver, and exchange offerings that have value for stakeholders and society. Forms of international marketing include export–import trade, licensing, joint ventures, wholly owned subsidiaries, turnkey operations, and management contracts. Marketing serves as a key agent of societal change and as a key instrument for the development of societal responsive business strategy.

Scope of International Marketing Exports and Imports: International trade can be a good beginning to venture into international marketing. By developing international markets for domestically produced goods and services a company can reduce the risk of operating internationally, gain adequate experience and then go on to set up manufacturing and marketing facilities abroad. Contractual Agreements: Patent licensing, turn key operations, co – production, technical and managerial know – how and licensing agreements are all a part of international marketing. Licensing includes a number of contractual agreements whereby intangible assets such as patents, trade secrets, know – how, trade marks and brand names are made available to foreign firms in return for a fee. Joint Ventures: A form of collaborative association for a considerable period is known as joint venture. A joint venture comes into existence when a foreign investor acquires interest in a local company and vice versa or when overseas and local firms jointly form a new firm. In countries where fully owned firms are not allowed to operate, joint venture is the alternative.

Cont… Wholly owned manufacturing: Contract manufacturing:  A company with long term interest in a foreign market may establish fully owned manufacturing facilities. Factors like trade barriers, cost differences, government policies etc. encourage the setting up of production facilities in foreign markets. Manufacturing abroad provides the firm with total control over quality and production. Contract manufacturing:  When a firm enters into a contract with other firm in foreign country to manufacture assembles the products and retains product marketing with itself, it is known as contract manufacturing. Contract manufacturing has important advantages such as low risk, low cost and easy exit. Management contracting:  Under a management contract the supplier brings a package of skills that will provide an integrated service to the client without incurring the risk and benefit of ownership.

Cont… Third country location: Mergers and Acquisitions: When there is no commercial transactions between two countries due to various reasons, firm which wants to enter into the market of another nation, will have to operate from a third country base. For instance, Taiwan’s entry into china through bases in Hong Kong. Mergers and Acquisitions:  Mergers and Acquisitions provide access to markets, distribution network, new technology and patent rights. It also reduces the level of competition for firms which either merge or acquires. Strategic alliances:  A firm is able to improve the long term competitive advantage by forming a strategic alliance with its competitors. The objective of a strategic alliance is to leverage critical capabilities, increase the flow of innovation and increase flexibility in responding to market and technological changes. Strategic alliance differs according to purpose and structure.

The International Marketing Task 7 Foreign Environment (Uncontrollables) 1. Competition 7. Structure of Distribution Domestic environment (Uncontrollables) Environmental uncontrollables country market A (Controllables) 1. Competition Price Product 2. Technology Target Market 5. Political- Legal Environmental uncontrollables country market B 6. Geography and Infrastructure 2 .Technology Promotion Place 4. Culture Environmental uncontrollables country market C 3. Economy 5. Political- Legal 3. Economy 4. Culture

Why Firms go International Proactive Stimuli Profit advantage Unique products Technological advantages Exclusive information Economies of scale Market size Reactive Stimuli Competitive pressures Overproduction Stable or declining domestic sales Excess capacity Saturated domestic markets Proximity to customers and ports

Reasons for marketing abroad Economies of scale and scope Existence of lucrative markets in foreign countries Saturated markets in the home country High R&D costs International opportunities Less competition New trade agreements …

Differences between domestic and international marketing Research data is available in a single language and is usually easily accessed Research data is generally in foreign languages and may be extremely difficult to obtain and interpret Business is transacted in a single currency Many currencies are involved, with wide exchange rate fluctuations Head office employees will normally possess detailed knowledge of the home market Head office employees might only possess and outline knowledge of the characteristic foreign markets Promotional messages need to consider just a single national culture Numerous cultural differences must be taken into account Market segmentation occurs within a single country Market segments might be defined across the same type of consumer in many different countries.

Differences between domestic and international marketing (continued) Communication and control are immediate and direct International communication and control might be difficult Business laws and regulations are clearly understood Foreign laws and regulations might not be clear Business is conducted in a single language Multilingual communication is requires Business risks can usually identified and assessed Environments may be so unstable that it is extremely difficult to identify and assess risks Planning and organizational control systems can be simple and direct The complexity of international trade often necessitates the adoption of complex and sophisticated planning, organization and control systems

Differences between domestic and international marketing (continued) Functional specialization within a marketing department is possible International marketing managers require a wide range og marketing skills Distribution and credit control are straightforward Distribution and credit control may be extremely complex Selling and delivery documentation is routine and easy to understand Documentation is often diverse and complicated due to meeting different border regulations Distribution channels are easy to monitor and control Distribution is often carried out by intermediaries, so is much harder to monitor Competitors’ behavior is easily predicted Competitors’ behavior is harder to observe, therefore less predictable New product development can be geared to the needs of the home New product development must take account of all the markets the product is sold in.

Opportunities and Challenges in International Marketing To handle newly emerging forces and dangers of unforeseen influences from abroad, firms need to: Be prepared and develop active responses. Envision new strategies. Develop new plans. Change the way of doing business.

Cont… The growth of global business activities offers increased opportunities. Knowledge transfer around the globe helps an international firm to build and strengthen its competitive position. International opportunities require an awareness of global developments, an understanding of their meaning, and a development of capabilities to adjust to change.

Benefits of International Marketing Coca Cola in India

Disney International

The Nestlé Way Nestlé sells more than 8,500 products produced in 489 factories in 193 countries Nestlé is the world’s biggest marketer of infant formula, powdered milk, instant coffee, chocolate, soups, and mineral water The “Nestlé way” to dominate markets is summarized in four points: think and plan long term decentralize stick to what you know adapt to local tastes

Benefits of Global Marketing Economies of scale Unifying product development, purchasing, and supply activities across countries Transfer of experience and know-how across countries through improved coordination and integration of marketing activities Stability of revenues and operations

4 P’s OF INTERNATIONAL MARKETING MIX Product adaptation and development for international marketing Packaging and labelling Translation of technical literature Quality management Licensing and contract manufacturing Choice of pricing strategy Competitor analysis Determination of discount structures Credit management Choice of delivery terms Costing and budgeting Product Price Place Promotion International advertising, public relations and sales promotion International direct marketing Control of salespeople Translation of sales literature Exhibiting Market research International distribution Control of agents Export documentation Cargo insurance Establishment of joint ventures and subsidiaries